During a contentious two-day hearing this week, the House Financial Services Committee explored the key elements of Financial CHOICE Act 2.0 and a summary report on the bill, which cited the Association's Center On Executive Compensation's arguments on the sound rationale for pay ratio repeal. Much of the hearing focused on core financial services regulation in the CHOICE Act (H.R. 10), which was formally introduced this week. However, executive compensation and governance issues did receive some attention in the context of refocusing the SEC on its core mission and exiting the socially-oriented approach mandated by the 2010 Dodd-Frank Act. Capital Markets Subcommittee Chairman Bill Huizenga (R-MI), sponsor of pay ratio repeal in two consecutive Congresses, lauded CHOICE 2.0 for its repeal of the pay ratio, noting that the removal of rules like pay ratio and conflict minerals will allow the SEC to appropriately focus on its core mission of investor protection and capital formation. Committee Republican views on many aspects of Dodd-Frank, including pay ratio, are expressed in the summary report of the CHOICE Act, which quoted the Association's Center On Executive Compensation in detailing the utter lack of investor support for the pay ratio. The full Committee is scheduled to mark up the legislation on May 2, and the Center submitted a letter of support, focusing on pay ratio repeal and the proxy advisory reform provisions included in the bill, stating that by including these provisions "the bill emphasizes the SEC’s role as securities and markets regulator with a core mission of investor protection."

Democrats have sought to delay consideration of the bill, with Ranking Democrat Maxine Waters (D-CA) calling for and securing a continuation of the hearing during which 11 witnesses were called, including Senator Elizabeth Warren (D-MA) and groups such as the AFL-CIO Office of Investment and the Center for American Progress. This, underscores the intensity of the debate expected during the markup. The Center will continue its extensive advocacy in support of pay ratio repeal and the proxy advisory firm oversight provisions.

Meanwhile, Senate Majority Leader Mitch McConnell (R-KY) announced that the Senate would hold a procedural vote on the nomination of Jay Clayton as SEC Chair, paving the way for a final vote during the week. Mr. Clayton has reportedly identified several heads for the SEC's divisions, including William Hinman of Simpson & Thatcher in Silicon Valley, as the head of the Division of Corporation Finance, who is focused on capital formation, especially with start-ups.